Dijsselbloem: Cyprus is still in search of a new economic paradigm

Dijsselbloem was addressing an event at the University of Nicosia

Newsroom / CNA

13 NOVEMBER 2018 - 11:00

Former Eurogroup chief, Jeroen Dijsselbloem said on Monday that the most important issues for the EU are currently not the euro or the economy but security and migration and agreed with French President Emmanuel Macron that Europeans need to raise their defence spending and work together.

Dijsselbloem was addressing an event in Nicosia marking 25 years since the establishment of the Cyprus Centre for European and International Affairs of the University of Nicosia.

“The most important issues for the EU are currently not the euro or the economy, but security and migration,” he said, adding that “these are issues which require European cooperation.”

Here, the former Eurogroup chief said, “I think we should take the lead of President Macron.”

“Europeans need to raise their defence spending and work together,” he pointed out.

According to Dijsselbloem, “Germany will have to accept the fact that it is a large country and therefor has an important role to play.”

He spoke on mistakes that were made in the past, noting that “in order to create free movement we took away the inside border controls, without securing the outside borders.”

On the refugee quota mechanism, he expressed the view that “central-European member states will never accept this. And I think we have to accept that reality.” And so, he added, “a smaller group of member states will have to go for enhanced cooperation in migration policy.”

“Migration and security are key issues right now, top of the list for electorates in almost all countries now. It is a key driver of populism,” Dijsselbloem said.

According to him “the position of the US, China and Russia should increase our sense of urgency. We need a European strategy so the EU is no longer just an economic power but also becomes a political power.”

On the monetary union, his key advice as he said would be “let’s finish what we started”, while “clearing out the remaining legacy issues.”

He called for the completion of the banking union, including a backstop to the resolution fund and a European deposit insurance scheme. He also said that the capital markets union project should also be pushed forward. “Brexit should increase our sense of urgency on this topic,” he pointed out.

At the same time, he spoke of the need to develop the ESM further.

“Allowing them to step in and support member-states in a situation of an adverse economic shock,” he said, adding that this should be done “of course under the condition of sound policies.”

Dijsselbloem highlighted the fact that “in order to take next steps in strengthening EMU we need trust between member states and in our institutions.”

Trust, he added, that solidarity between us is honed hand in hand with responsibility. “With governments living up to the commitments made to the Eurozone.”

And trust, he continued, “in our common institutions that they will respect what has been agreed and apply it fairly and evenly to all member states, large and small.”

“We cannot build a community without all of us also taking responsibility for the interests of the community as a whole,” he pointed out.

According to the Dutch politician “blaming Europe for the many flaws in our national economies, legal systems or domestic political governance will bring us nothing but a populist backlash.”

“National politicians need to take their responsibilities and that includes sometimes confronting the electorates with the real issues at steak and the difficult choices to be made,” he said.

Dijsselbloem also stressed that “Europe has a major role to play in some issues. Security and migration is certainly one. Dealing with the climate issue is another.”

“Taking the lead in international trade, closing deals around the world, certainly in a time when others don’t,” he said. Stimulating, he added, “research and development, public and private, and drastically increasing European funds in this area, but also off course strengthening the Monetary Union.”

He pointed out that “a lot of work still needs to be done.”

“As the external environment of our union is becoming more and more challenging, the EU will have to lead. As our electorates are becoming more and more impatient, the worst thing to do is to let populism paralyze us,” he said.

“It’s time to act; It’s time to show results,” he added.

On his part Andreas Theophanous, President of the Cyprus Center for European and International Affairs and head of the department of politics and governance said in his address that “five and a half years after the economic collapse of March 2013 we must make a pragmatic assessment of the situation and see how we move forward in the most effective way.”

Cyprus, he pointed out, “is still in search of a new economic paradigm.”

According to Theophanous “this should include the creation and/or the enhancement of new engines of economic growth.” He further added that “we also need to address effectively the problem of non-performing loans, to overcome the challenge of structural unemployment, especially for young educated people, and to have after all a comprehensive narrative which regains the moral high ground for Cyprus in all aspects.”

Moreover, Theophanous noted, “a major objective for Cyprus is to have a creative role in the region and in European affairs.”